The risk landscape for global businesses is intensifying, with 42% of executives now perceiving their environment as high-risk, up from 31% last year, according to a survey by Beazley.

Key themes in the survey are the interconnectedness of businesses, which creates third-party risk and underscores supply chain concerns. Employment-related risks, including shifting expectations of Gen Z employees, and regulatory and reputation risk are also top of mind for executives, Beazley found.

Despite a higher percentage of executives with an elevated sense of risk, a surprising 81% still feel resilient, only a slight dip from 84% in 2023, the survey found.

While macroeconomic conditions appear to be stabilizing, D&O risks are still front of mind for global business leaders. In the event of a company filing for bankruptcy, D&O litigation can quickly follow for executives. Amid persistent inflation and the ongoing threat of recession, this has been a key threat in recent years, the report noted.

“Originally, directors and officers liability insurance’s main focus was on the financial performance of the company and making sure that that was established within the guidelines that they had set out. And now when you think about the potential for liability, it is a whole host of areas, whether it be a cyber attack, a business interruption, an employee situation,” commented Bethany Greenwood, CEO of Beazley Furlonge Ltd. and global head of specialty risks for Beazley.

“Businesses and their executives are feeling the heat, with D&O liability extending beyond the realms of financial performance, with litigation now being brought against executives following cyberattacks, supply chain disruption and employment-related issues,” she added. “The threat landscape has fragmented and become increasingly multifaceted with executives left scrambling to protect themselves.”

Top Business Risks Identified

When it comes to the biggest threats on the horizon, nearly one quarter (23%) of executives cited employer-related risk as their top concern this year, up from 18% in 2022.

Looking further ahead, failure to comply with new environmental, social and governance (ESG) requirements is expected to be the leading risk in 2025, according to 34% of respondents. Reputational risk and the potential for decisions by directors and officers to damage brand value and customer trust also climbed the list of worries, with 20% ranking it as their primary business risk compared to 17% a year ago, according to the report.

While risk perceptions are on the rise, readiness to tackle some of these challenges is lagging. Over a quarter (26%) of business leaders feel unprepared to anticipate and respond to ESG compliance risk, Beazley noted. Similarly, 25% admit they are not adequately equipped to manage reputational risk, although this represents an improvement from the 28% who expressed such reservations last year.

Industry-Specific Risk Concerns and Preparedness

• Supply Chain Instability: The public sector and education (24%), tech, media, and telecoms (20%), and manufacturing, retail, food & beverage (19%) industries expressed the greatest concern with supply chain instability. On the other hand, transportation, logistics, cargo, and aviation (78%), tech, media, and telecoms (77%), and healthcare, life sciences, and commercial property, real estate, and construction (76%) felt the most prepared for this risk.
• Business Interruption: Hospitality, entertainment & leisure (21%), commercial property, real estate, and construction (20%), and healthcare, life sciences, and energy, utilities, and marine (18%) were the industries most concerned about business interruption. Tech, media, and telecoms (79%), healthcare and life sciences (78%), and transportation, logistics, cargo, and aviation (77%) were the most confident in their preparedness for this risk.
• Boardroom/Reputation Risks: Financial institutes and professional services (25%), healthcare and life sciences (22%), and manufacturing, retail, wholesale, food and beverage (19%) were the most concerned with boardroom and reputation risks. Transportation, logistics, cargo, and aviation (78%), tech, media, and telecoms (77%), and healthcare, life sciences, and commercial property, real estate, and construction (75%) felt the most prepared.
• Employer Risk: Transportation, logistics, cargo, and aviation (26%), financial institutes and professional services (25%), and healthcare, life sciences, commercial property, real estate, construction, and financial institutions (24%) were the most concerned about employer risk. Commercial property, real estate, construction, tech, media, telecoms, and transportation, logistics, cargo, and aviation (79%), healthcare and life sciences (75%), and manufacturing, retail, wholesale, food and beverage (74%) felt the most prepared.
• ESG Risk: Manufacturing, retail, wholesale, food & beverage, and transportation, logistics, cargo, and aviation (25%), commercial property, real estate, construction, and tech, media, and telecoms (23%), and public sector and education (22%) were the most concerned about ESG risk. Commercial property, real estate, and construction (78%), tech, media, telecoms, and transportation, logistics, cargo, and aviation (77%), and healthcare, life sciences, and public sector and education (75%) felt the most prepared for this risk.

Leveraging Insurance and Key Takeaways

As global business leaders grapple with an intensifying risk landscape, many are turning to insurance as a way to bolster resilience. Nearly one in four (24%) plan to explore insurance options that include risk and crisis management services, per the report. Trust in the insurance industry is on the rise, with 46% of executives saying their trust in insurance value has increased and 47% reporting growing trust in insurers themselves.

For businesses navigating today’s risk environment, Beazley suggested several key actions can help build resilience:

• Review supply chain relationships to identify potential weak links and develop contingency plans to mitigate disruptions.
• Carefully manage reputational risk when responding to issues, avoiding stances that could alienate key customer segments.
• Be prepared to quickly adapt to new legislation in fast-moving regulatory areas like ESG and AI, especially for firms operating across multiple jurisdictions.

Insurance brokers also have a critical role to play in helping their clients confront emerging risks, the report added, recommending:

• Educate businesses on the changing nature of D&O threats that extend beyond traditional financial risks. Tailor coverage appropriately to address potential fallout from cyberattacks, business interruptions, and rising costs.
• Provide comprehensive insurance solutions to support businesses’ unique risk profiles across the various markets where they operate.
• Help executives navigate the increasingly complex employer risk landscape, spanning issues like high-profile tribunals, AI recruitment bias, DEI challenges, and shifting workforce expectations. Offer guidance along with robust EPL coverage.

View the full survey here. &